All Forum Posts by: Tyler Stephens

Duh. In hindsight seems obvious. @Travis Sperr how do you handle incoming application fees? I included a google wallet request for $25 when I sent the email with the application, but I don't know... not sure its very professional since I can't really issue a receipt or anything.

I have a family interested in renting my home but they don't yet live in the area. I am about to email them my rental application but it includes a few signatures including the release of information authorization. What is the best way to collect signatures? I looked at Docusign but it seems complicated just for little old me. 

Any suggestions would be greatly appreciated.

Sending out the Bat signal to see if anyone can think of a good solution to this dilemma. A friend of a friend called me because she is renting a house in Lakewood and the owner has decided to sell the house. 

The house is near 6th and Wadsworth. She said its a 3/2 but one of the bedrooms is in the basement w/o a window so technically a 2/2. I didn't get the total lot size but I think it has a little land because it does have a barn on the property and horses, I think. She is paying $2900/mo in rent and her 6 month lease is up at the end of May. The owners are planning to put the house on the market in June for a little over $500k. 

She reached out to me hoping that a real estate investor might be able to come up with a solution that will allow her to stay in the house. She asked about owner financing, but the owners didn't seem interested. She doesn't have the money or credit to buy the house herself. Just doing the quick math in my head, $2900/mo doesn't sound like enough return on a $500k purchase. However, she did say one of the reasons she wants to stay so badly is she has plans to air bnb it and has other ideas to use the property to earn a little extra income, so it may be the solution is to just buy the property and raise the rent slightly.

Can anyone think of any other options I can suggest to her that I haven't thought of? I didn't get a ton of info about the property, so if more info is needed I can get a hold of her and find out more. 

I did. It was awesome! A little different than the usual meetup, since it was at BP HQ and there might have been 150 people there. Definitely check out the next one. Look for the BadAss real estate group meetup in the community section > networking events.

He bought it for $190k. He added that info a couple posts after your first post. Isn't the 2% rule (guideline) just what it rents for / what you pay for it? Obviously its still not 2%, but since that other 800 is going towards the amortization, i think should be considered in the overall equation. $2200/month for $190k still isn't a grand slam, but its good enough to be worth considering.

And since the house is already bought, there are only 2 relatively simple options. $1400/month from renting, or $140k profit from selling. Personally I think I would rent. 

Or maybe it should be $1400/month rent or $213k lump sum. Only 140k profit but you would have $213k to work with, so maybe that's the more important number. 1400/mo is 16800 per year. 16800/213000= .0788. So if you took the $213k, it would have to make you 7.9% yearly to beat the monthly income.

But again, I have to stress that I am a noob and could well be missing something very important. 

@

@Michael Losasso what would you do with the money if you sell the house?

110+ people signed up... This is gonna be epic. Should I stop and grab a keg?

@Thomas S. Can you explain those numbers? How do you value the ROE at $1690? Not specifically that number, I just don't even know what it means to value the ROE. I guess. Very confused. If you could try and educate me, it would be much appreciated.

This seems like a pretty good deal as a rental. You aren't getting $2200 for a $350k house, you are getting $2200 for a 190k house, which is a deal you will not get in Denver anymore. that's $1400 in cash flow before expenses and CapEx.

This seems more like a question of opportunity costs. You can get $1400/month minus capex and expenses or you could get about $140k lump sum for the kitchen remodel and selling. Isn't $1400/month a 12% return on $140k? I'm looking at it like, if you take the $140k, it has to earn you 12% or more to be a better deal than taking the cash flow.

I am however, not nearly as experienced as most of the above posters, and am probably missing some vital part of the equation. I'm very interested to see what everyone says and will be following this topic closely.

Welcome Matt!

Learn as much as you can. Its too bad you're going to miss tonight's meetup, it promises to be a good one. I love them not only for the education, but for the motivation. Definitely make plans to start attending!

@Trevor Beck Welcome! Spend your time learning. Podcasts in the car are a great way to jumpstart your real estate education. Self-employment does put you at an unfair disadvantage, but can be overcome. I've always wondered myself if you can structure your business a certain way and pay yourself a W-2 wage to get around the financing drawbacks of being self-employed.

If you like to read, I recommend the Richest Man in Babylon. Its a short read about how money works in the simplest terms possible, and since REI is all about financial freedom, it really helps to lay an intelligent groundwork. I was sort of shocked about how little I truly knew about money before reading it. It helped me understand my financial situation better and how to get a grip on it.

I'll look for you at the meeting tonight. They are usually awesome.

Paying off your credit card debt will have the most obvious positive effect on your bottom line. If you have $5000 debt at 15%, paying it off will have the same net effect on your bottom line as finding a $5k investment at 15% (which, if guaranteed, would be an excellent investment for anyone.)

On the other hand, you can pay your monthly minimums temporarily and get your next house sooner, get more investment income and equity coming in, and THEN pay off your cards with that extra income. If you look at all the ways rentals earn you money (appreciation, cash flow, tax benefits, and amortization) and compare that with what your credit card debt is costing you, you'll be able to see which is the better route strictly from a numbers standpoint. 

Then there's the intangible things to consider, like the fact that getting your next property can be very exciting. I'm also considering these options in a vacuum. Take a close look at your personal situation.

I'm thinking this out in my head as I type and now I'm also considering the ability to leverage properties. It will be easier to use equity in your properties to grow your portfolio down the road. (as opposed to using credit card debt for a down payment.) If you do decide to buy, the FHA loan program for owner-occupants is a very powerful tool. Just depends on if living there for a year will be a problem.